Standing Committee G

Mr. Win Griffiths in the Chair]

Education Bill

Clause 6 - Exemptions available to qualifying schools

Amendment proposed [this day]: No. 10, in page 5, line 9, at end insert— 
'(2A) Regulations containing the prescribed criteria relating to the performance of, or the quality of leadership in, the school must be approved by resolution of each House of Parliament in England or by agreement of the National Assembly in Wales'.—[Mr. Brady.]
 Question again proposed, That the amendment be made.

Graham Brady: I am not remotely satisfied by the Minister's response. I hope that other members of the Committee are also disappointed that once again the Government are resisting the opportunity to allow Parliament a greater say, and are instead arrogating power solely to Ministers. That said, we have had a worthwhile exchange on the subject, and I shall not detain the Committee further on the amendment. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Andrew Turner: I beg to move amendment No. 96, in page 5, line 19, after 'shall', insert 'within 28 days'.
 This is perhaps the simplest amendment to explain. It sets targets for the Government's response to requests for orders from schools that qualify automatically for earned autonomy. Like many hon. Members, I have had the privilege of working in Government Departments and other places where the need for urgent action is sometimes overcome by the sense of risk inherent in taking any such action. [Interruption.] My hon. Friend the Member for Epping Forest (Mrs. Laing) recognises that situation. I am setting a target of 28 days for the Government to lay the necessary orders to enable schools to benefit from the autonomy that they have earned.

Stephen Timms: I welcome you and other hon. Members back to the Committee, Mr. Griffiths.
 The hon. Gentleman made an interesting point. On Tuesday, we discussed the Government's intention to make as many exemptions available as possible as of right, although I gave the assurance that we shall consult widely before deciding which flexibilities should be available as of right and which should be discretionary. 
 I can reassure the Committee that we shall do everything possible to make sure that qualifying schools earn autonomy as quickly as possible. We intend to issue the orders in batches, perhaps monthly. Although we want to make the orders as quickly as possible, it would not be right to require in law that orders be granted within a fixed 28-day period. In practice, we hope to make orders more quickly than 28 days, but if, for example, several hundred applications were received at once, or if applications were sent in during a holiday period, that might not be possible. 
 I underline my assurance that the Department will act as quickly as possible in all circumstances. It would not be appropriate for our hands to be tied as tightly as they would be under the amendment, but I readily recognise the importance of the hon. Gentleman's point that the orders need to be made quickly.

Andrew Turner: I am grateful for that commitment. The hon. Member for Altrincham and Sale, West (Mr. Brady) promised that we would not delay business unnecessarily, and to be consistent with that, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Andrew Turner: I beg to move amendment No. 95, in page 5, line 29, leave out
'without the consent of the Secretary of State'.

Win Griffiths: With this it will be convenient to take amendment No. 65, in page 5, line 30, at end insert
'unless they replicate those which the Secretary of State has designated as attracting exemption or modification as of right in England'.

Andrew Turner: The amendment goes to the heart of the devolution debate. The Government propose that the National Assembly for Wales, which to a great extent has autonomy on the introduction of the Bill's provisions, should not enjoy such autonomy on matters that relate to teachers' pay and conditions. The Secretary of State is required to agree any such proposal by the Assembly. Indeed, subsection (5) states:
''No regulations . . . which relate to a pay and conditions provision may be made by the National Assembly for Wales without the consent of the Secretary of State.''
 That is inconsistent with the Government's policy on the autonomy of decisions in Wales. I recognise that there is one national pay and conditions document for teachers, which affects England and Wales. However, it is inconsistent that a Minister acting for England has the power to prevent the National Assembly from reaching a decision that is entirely sensible for Wales, or that it judges to be so. I should very much like to hear the Minister's defence as to why the holder of the office of Secretary of State needs to have that veto over the Assembly's decisions.

Graham Brady: I am pleased to follow my hon. Friend the Member for Isle of Wight (Mr. Turner). These complementary amendments offer the Under-Secretary of State for Wales, who may think that he has been earning his living by sitting listening to us at the last few sittings, an opportunity to earn his living by enlightening us on some of his views on appropriate limitations of decision-making power in Wales.
 My hon. Friend has rightly pointed out the limits that the Bill places on the discretion and decision-making powers of the National Assembly for Wales. Devolution and the devolved settlement are thereby constrained. With amendment No. 65, I do not seek to go quite so far as to remove the Secretary of State's influence altogether, but I do seek to draw out the reasons why the Secretary of State might want to exercise that restraint on decisions at which the National Assembly might arrive. 
 This specific circumstance is difficult to justify. There is an unwarranted restraint on the ability of the people of Wales, the National Assembly and schools in Wales to exercise the freedoms that we would wish them to have. The Secretary of State can designate certain categories of freedom and flexibility as available to schools in England as of right. 
 We assume that a school in England that meets the criteria for earned autonomy set out by the Secretary of State—regrettably, following the withdrawal of amendment No. 10, they will not be approved by Parliament or the National Assembly—and that seeks freedoms and autonomy that are allowed as of right will have them as of right. 
 However, a school in Wales that meets the criteria; that is in the same circumstances; whose achievements are every bit as good; and that is successful as show by its leadership and results will not enjoy the freedom as of right that a comparable school in England will. My amendment would correct that unfairness and allow greater freedom for schools in Wales. It would not allow greater freedom than that given to schools in England, or extend the devolved settlement to give new powers and discretions for Wales that do not exist at present. It would merely ensure that the freedom that is a right for a school in England would also be a right for a school in Wales. Advantage would not have to be taken of it, and it would place no obligation, but it would provide a right that may be taken advantage of in order to benefit pupils and raise educational standards in Welsh schools, just as is provided for English schools.

Don Touhig: I welcome you to the Chair, Mr. Griffiths. I have, as the hon. Gentleman points out, a chance to earn my corn and participate in the debate.
 The Government intend to resist the amendments. Under the devolution settlement, to which the House signed up in passing the Government of Wales Act 1998, discretion for teachers' pay and conditions is not devolved to the Assembly in Cardiff. That remains true regardless of whether the Assembly chooses to use earned autonomy powers in relation to pay and conditions in the same way as England or differently. 
 The Bill is designed not to unsettle the devolution settlement, which is why National Assembly regulations on the matter will require the consent of the Secretary of State regardless of whether the Secretary of State has made a similar order in England. Clearly, if provisions were proposed for schools in Wales that mirrored those already agreed in England, it would be highly unlikely that the Secretary of State would want to disagree. 
 On the same basis as I would resist amendment No. 65, I would also resist amendment No. 95. Far from doing what Opposition Members claim, amendment No. 95 would remove the autonomy that the Bill allows the Assembly. As the power is not devolved, removing the Secretary of State's power to give consent would mean that schools in England would have the autonomy to vary pay and conditions under the earned autonomy proposals but schools in Wales would not. The amendment would have quite the opposite effect to that which Opposition Members argue. I therefore urge the Committee to resist the amendments.

Andrew Turner: In that case, why is the Under-Secretary inserting an additional level of bureaucracy, to use a pejorative term, in a decision relating to schools in Wales? If the Assembly has no standing in decisions about teachers' pay and conditions, why is he inserting a standing in the Bill, admittedly in a different part of the clause? Why is he not simply reserving the whole power to the Secretary of State, as is the case for England?

Don Touhig: That is precisely what is being done in the Bill: matters relating to pay and conditions are reserved to the Secretary of State.

Graham Brady: I am almost satisfied by the Minister's remarks, and I am pleased that he has had an opportunity to stretch his legs and exercise his vocal chords a little. However, I should like to press him just a little further. In relation to the extent of the devolution settlement as it stands, he says that it is highly unlikely that the Secretary of State would try to veto a provision for Wales that is available as of right for England. Will he go slightly further and say that, if it is available as of right for English schools, the Secretary of State would not exercise the right of veto for Welsh schools in those tightly defined circumstances?

Don Touhig: It would not be proper for me to imagine the circumstances suggested by the hon. Gentleman. Each case will be taken on its merits. However, the Administration of the National Assembly support the Bill as a workable solution to the problems in the education service that we are trying to reform in England and Wales. So I resist going down the line that the hon. Gentleman suggests, however tempting it may be, and I urge my hon. Friends to resist both amendments.

Andrew Turner: I am still puzzled. I recognise that it is not possible for me to speak to an amendment that has not been drafted, let alone moved, but when I drafted this amendment, I was conscious that a school in Wales faces the National Assembly for Wales and the Secretary of State when it attempts to achieve earned autonomy. The National Assembly has to jump through two hoops, as it has to determine the conditions under which autonomy can be earned, and the Secretary of State must approve them. In other words, it is a two-stage process. The Minister says that I sought to remove the wrong stage, but why must schools in Wales face a two-stage process, rather than the single-stage process that is faced by schools in England?

Don Touhig: I do not agree with the hon. Gentleman. The same process will apply in Wales as in England, because the Secretary of State will have the powers provided under the Bill. Pay and conditions in Wales will be a matter for the Secretary of State. If we follow the line suggested by the hon. Gentleman and remove from subsection (5) the words
''without the consent of the Secretary of State''
 the subsection would read: 
''No regulations under subsection (1) which relate to pay and conditions provisions may be made by the National Assembly for Wales.''
 It simply stops there.

Andrew Turner: I accept the Minister's comments on that point, but he has not answered my earlier point about why the National Assembly and the Secretary of State make decisions that relate to Wales, but only the Secretary of State makes decisions that relate to England, when he said that only the Secretary of State has standing in issues relating to teachers' pay and conditions.

Don Touhig: It is not a problem, because under our proposals, the National Assembly will have a role in all other educational matters that are devolved to it. The clause simply provides that pay and conditions are not devolved, but should remain reserved matters for the Parliament at Westminster, as was agreed in the devolution settlement. It is as simple as that. It is not a difficult process.

Andrew Turner: I am not entirely convinced but, if the Committee agrees, I will go away and think about it further. Therefore, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Phil Willis: I should like to speak to clause stand part.

Win Griffiths: I am going to rule that the long debate this morning was sufficiently broad to cover clause 6, so I will put the question on clause stand part forthwith.
 The Chairman, being of the opinion that the principle of the clause and any matters arising thereon had been adequately discussed in the course of debate on the amendments proposed thereto, forthwith put the Question, pursuant to Standing Orders Nos. 68 and 89, That the clause stand part of the Bill. 
 Question agreed to. 
 Clause 6 ordered to stand part of the Bill.

Clause 7 - Applications for orders under section 6(2)

Eleanor Laing: I beg to move amendment No. 15, in page 5, line 37, at end insert—
'with particular reference to the needs of children at the school with special needs'.

Win Griffiths: With this it will be convenient to take amendment No. 36, in page 5, line 37, at end insert—
'and where a proposed change involves more than 15 per cent. of the total curriculum offered at the school, as measured by time allocated to lessons, secure a minimum response level of 33 per cent. of parents, with the majority supporting the changes.'.

Eleanor Laing: The amendment relates to children with special needs. We have submitted it mostly as a probing amendment. As I said in our debate on an earlier clause, the Bill has not yet dealt with the matter of special needs and does not mention it up front at the beginning. My main reason for moving the amendment is to give the Minister an opportunity to assure the Committee that he is giving special needs the priority that it deserves. We have considered before the fact that special needs children who are integrated into mainstream schools must be treated differently and with extra care and consideration. The amendment relates to clause 7(2)(a), which details how the governing body can apply to make changes to curriculum provision. The clause states, rightly, that any application should be made only after consulting the parents of registered pupils at the school. We thoroughly support that, but suggest that schools should consult particularly the parents of special needs children.
 Dealing with those children within the general school system can be problematic because of the huge variety of special needs. It is not possible to categorise everyone who has a statement as being statistically a special needs pupil. The details must be broken down so that the school is aware, in drawing up the budget and curriculum, of the particular needs of particular children. As I said earlier, those with mild special needs, such as the need for extra tuition for mild dyslexia, can be taught in the mainstream system with few amendments to the curriculum. However, children with, for example, Asperger syndrome and other such extreme autistic conditions must have special tuition, which should be considered when changes to the curriculum are being debated. 
 When making such consideration, schools should always consult the parents, although this is not just a question of consulting parents. It is also a question of bringing in experts on the problems that special needs children have so that those who are responsible for designing the curriculum, or changes to it, can be properly advised. I shall not delay the Committee any further on the issue, because this is a probing amendment. We want to ensure that the Minister and his colleagues have considered special needs in relation to this particular aspect of potential school autonomy.

Chris Grayling: I want to return to a theme that I have touched on before. As the Committee is aware, I am a strong supporter of the principle of autonomy for schools and giving schools the ability to take decisions about many of their activities. However, I also believe that that freedom should be counterbalanced by a minimum curriculum framework that provides consistency to our education system. Most particularly, we need an identifiable framework so that parents can make informed judgments on the nature of their children's education.
 The purpose behind the amendment is to give parents a check against a decision by a governing body that involves wholesale changes to the curriculum in the school. In particular circumstances, there may be good reason for making such decisions, but it is not right and proper that those changes should be sufficiently substantial that they divert completely from the framework provided by the national curriculum. 
 Parents should have a detailed right of reply to proposals from a governing body. Under the clause, the right of consultation enjoyed by parents is too vague. There is no clear statement about the rights of parents, or about the responsibilities of governing bodies to consult and to secure the backing of parents before they pursue a path that will have a radical effect on the education of the children in that school. The amendment would ensure that there was a bottom line for that consultation process. The governing body would need to demonstrate that it had reached out to a reasonable proportion of parents. 
 I recognise the difficulties faced by governing bodies when trying to engage parents in consultation exercises. Anyone who has ever managed a consultation exercise in the public sector knows how difficult it can be to generate responses. I attempted to be realistic when setting the figures in the amendment. There should be a minimum number of parents with which the governing body discusses proposals. It should be able to demonstrate that it has the support of parents when pursuing significant changes to the curriculum. Clearly, that does not apply to small changes, such as the introduction of an additional subject or minor modifications in the school's activities. However, if a school has a radical plan for change under the terms of the Bill, it should be able to demonstrate that it has the support of parents. The amendment would give parents the minimum guarantee that they will be consulted and that their views will be taken into account.

Phil Willis: I am glad, Mr. Griffiths, that you have allowed me to speak to this small amendment. It was kind of you. I withdraw some of the comments that I made this morning.

Win Griffiths: We can have too much of a good thing.

Phil Willis: That is what my wife says.
 There is a good principle behind the amendment tabled by the hon. Member for Epsom and Ewell (Chris Grayling). The idea of change that involves the parent body is important. The Education Reform Act 1988 through to the Education Act 1996 placed a duty on schools to involve parents in annual meetings, for example. If members of the Committee have ever attended an annual parents' meeting at which 10 parents attended—if that—they will know how difficult it is for schools to involve parents. Although the principle of the amendment is worth considering, the proposal is unrealistic. 
 Secondly, when we prescribe levels for ballots—basically, the amendment refers to a ballot on a process—we run into major problems. The population of a school changes constantly. In some London boroughs, one in three secondary school children will move during the year, and that makes it almost impossible for a consensus to be reached, let alone meet the terms of the condition. In 11 to 16 or 11 to 18 schools, 20 per cent. of the school population of mandatory school age will leave during the year. To use those parents to vote on something that their children would never been involved in seems inherently wrong within the system. 
 My third point is that the Minister, for whom I have much respect, talked about work load. As a practising head, my greatest work load was the documentation and arrangements to fulfil the requirements for the annual parents' meeting. The proposal would heap a huge amount of bureaucracy on head teachers and school governors, who would give it to the head teacher to deal with, and work involved would be out of all proportion to anything that might be gained.

Chris Grayling: The last thing I want is to impose an undue work load. The point about the 15 per cent. threshold is that it is unlikely that many heads or governing bodies will want to make a change that represents more than 15 per cent., except in unusual circumstances. The figure was chosen to add the caveat that if wholesale changes are to be made, there is a duty to consult. In the case of minor changes, the responsibility of a head or a governing body is to take decisions on behalf of the school.

Phil Willis: I hear what the hon. Gentleman says, but my arguments remain valid. I shall not return to our debate on clause 6, as I should be ruled out of order if I did so. However, on the subject of disapplication of the national curriculum, the Minister said that most of it would not be disapplied; therefore, having a wholesale change, which I would like to see in many schools, is unrealistic. In the light of my comments, I hope that the hon. Gentleman will not press the amendment to a vote.

Stephen Timms: I am glad to give the hon. Member for Epping Forest the assurance that she seeks about the seriousness with which we take the need for adequate provision for children with special educational needs. That was shown by the launch this week of the new code of practice, circulated on two occasions in the House, which focuses on meeting individual needs. Raising standards for children with special educational needs is an integral and central part of the task of raising the standards of education more broadly. We want to make the process through which schools earn their autonomy as simple and as unbureaucratic as possible. The clause makes it clear that the governing body must consult the parents or pupils in respect of any curriculum provision. I confirm that that will include reference to provision for children at the school with special needs. Parents have a voice through that arrangement and through parental representation on the governing body; we should not lose sight of that in this discussion. I think that the governing body of a successful school would not press ahead disregarding the views of parents.
 Ofsted will continue to inspect schools that exercise earned autonomy and to be involved especially with the education that a school provides for children with special needs. That is a further safeguard. 
 As to the amendment, to prescribe in the Bill the exact proportion of the curriculum and of the parents who support a proposed change would add disproportionately to the bureaucracy, without comparable benefits. I took exception to some of the points made by the hon. Member for Harrogate and Knaresborough (Mr. Willis), but I agree with him on that matter. Schools are required to consult. It would be an onerous exercise to set up the ballot envisaged and difficult to work out what the 15 per cent. figure referred to and how to calculate 15 per cent. of a curriculum. Safeguards are built into the process and I hope that the Committee, which is right to be concerned about the matter, will accept that they are adequate to protect the interests of parents.

Eleanor Laing: I have listened carefully to the Minister, and I accept his assurance that attention will be paid to special educational needs in this context. I beg to ask leave to withdraw the amendment.

Win Griffiths: Is it the wish—

Caroline Flint: I had hoped to speak to the amendment.

Eleanor Laing: May I give way to the hon. Lady?

Win Griffiths: Order. I had started to put the Question. I am keen to get Mr. Willis back on his feet. Is it the wish of the Committee that the amendment be withdrawn?
 Amendment, by leave, withdrawn.

Phil Willis: I beg to move amendment No. 53, in page 5, line 38, at end insert
'the head teacher and'.
 You have redeemed yourself, Mr. Griffiths, and you are back on my Christmas card list. 
 The Minister may say that the amendment's purpose is covered in the Bill, but clause 7(2) specifies that there will be consultations with the teaching staff, not with the head teacher. I hope that the Minister will simply accept my non-contentious amendment. The head teacher has a role in the school that is different from that of the rest of the teaching staff. He or she oversees performance, recommends performance-related pay awards and implements key policy aspects such as pay and conditions provisions, whatever they eventually will be. Therefore, we must include the head teacher, as well as the staff, to ensure that they have a prima facie role in the consultation process.

Stephen Timms: The sentiment behind the amendment is not contentious, but I hope to persuade the Committee that the amendment is unnecessary. The requirement to consult each teacher includes the head teacher. I am happy to put that on the record to allay any doubts.
 In addition, the head teacher will have a full opportunity at governing body discussions to put his or her views. The majority of head teachers are governors, but all head teachers, whether governors or not, can attend all governing body meetings and receive all papers. 
 I agree that it is essential to take the head teacher's views into account in making proposals about changes to pay and conditions. Governing bodies will have to take careful note of their recommendations, but in many instances the proposals will come from the head teacher. Governing bodies recognise the key role of the head teacher in implementing proposed changes and in ensuring the motivation of staff through times of change. No governing body would take that route without the involvement of the head teacher. 
 I hope that I have been able to persuade the hon. Gentleman that the amendment is unnecessary. His point has already been taken into account.

Phil Willis: I am disappointed by the Minister's response, because I thought that my request was reasonable. There is a clear difference between a school teacher and a head teacher. The Government's descriptions of the two posts demonstrate how separate the roles are.
 Head teachers have a prima facie role. If there are major changes, particularly as a result of earned autonomy, the head teacher will play a pivotal role. By refusing to include both, the Minister is just digging his heels in; he does not want to change the Bill in any way. That is disappointing. Having aired the issue, I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Question proposed, That the clause stand part of the Bill.

Caroline Flint: I have a brief point. Will the Minister clarify what role pupils at the school will have in the consultation process? Subsection 7(2)(c) says:
''in any case, consult such other persons as appear to them to be appropriate''.
 Where there are changes to the curriculum it is useful to engage the pupils, if appropriate and according to their age, in some of the discussion. Where does my hon. Friend see young people fitting into that consultation process?

Stephen Timms: My hon. Friend makes an important point. She is right to draw attention to subsection (2)(c), which gives the opportunity to consult young people, among others. An amendment has been tabled on this matter, and we will debate it at a later stage. The Government agree with her about the importance and value of consulting with young people. We recently funded Schools Council UK, an education charity to produce a secondary schools toolkit to support exactly that kind of student participation in the decisions that affect them. Schools Council UK has already produced a successful version for the primary level. That is just one example of ways in which we are encouraging the involvement of young people in these decisions. I agree that this is important and I hope that it will be adopted more widely.
 Question put and agreed to. 
 Clause 7 ordered to stand part of the Bill.

Clause 8 - Removal of exemptions

Phil Willis: I beg to move amendment No. 54, in page 6, line 9, after 'body', insert
'but after consultation with that body'.
 This is a small but important amendment. This Government and previous Governments have rightly stressed the importance of the governing body in the implementation of school policy. Since 1998, increased powers have been given to the governing body. Under existing legislation, the governing body has most of the powers regarding schools, not the head teacher, as is often thought. 
 The amendment seeks an explanation of why the governing body should not be consulted about the removal of exemptions. The clause basically says that the Secretary of State or the National Assembly can make an order to revoke without any application by the governing body. We understand that there may be a need to do that. However, we should like to insert the phrase 
'but after consultation with that body'.
 Although we recognise that the governing body might not make the request, if the Secretary of State is to act in a relatively unilateral way, it should have a right to be consulted on the matter. The amendment would simply enshrine in the Bill the importance of the governing body where changes are being made to any element of school status.

Chris Grayling: The hon. Member for Harrogate and Knaresborough has identified an important issue. The clause does not allow for unexpected developments in the history of a school that can affect its results or its performance. The Bill provides for schools to form a federation and, de facto, to become a single school with a single governing body. There could be linkages between less successful schools and more successful schools.
 We all hope that best practice in education can be spread to schools with problems. A less successful school might seek the guidance of a better performing school and to share some of its culture, facilities, expertise and so on. In such an environment, as two schools get closer together there may well be fluctuations in the performance of a school. If they truly merge into one school and become a single unit, it is conceivable that there may be ups and downs in its performance that reflect particular arrangements rather than the academic performance of pupils. That is a possible example. 
 Equally, demographics change, and every school has its ups and downs and good years and bad years. A school may move down the league table before returning up a year or two later for reasons that are probably beyond the control of the governing body, head teacher or the staff. This is not an exact science. There is a danger that if the Secretary of State has absolute powers to intervene and remove qualifying status, and may do that without referring to those on the ground who know the school's detailed situation, the removal of the exemption would be unfair and would bear no relation to the long-term trends, skills and competences in the school. 
 I ask the Minister to address the important issues raised by the amendment.

Stephen Timms: I expect that schools that earn their autonomy will use that wisely and continue to push up standards and improve the quality of leadership. If they do not do that and standards fall significantly, the Secretary of State and the National Assembly for Wales must retain the right to act quickly and decisively.
 The withdrawal would not occur automatically simply because the performance criteria were no longer met. A judgment would be made. In practice, any intervention would be a result of dialogue with the applicant body and, perhaps, other relevant bodies that were originally consulted. I am happy to confirm that we would expect to consult. However, there may be circumstances in which the need for speed would outweigh that. For example, there may be a school that no longer meets the conditions for earned autonomy and has serious problems, and its governing body could make a bizarre curriculum change. In that case, we would wish to step in quickly to protect the interests of the children at the school. However, that process will not be common.

Chris Grayling: I find it slightly strange that the Minister argued against parents being allowed to vote on a bizarre curriculum change, but he wants the Secretary of State to have that power.

Stephen Timms: I am simply suggesting that one can imagine circumstances in which it would be important to act quickly to protect the interests of children at the school. The clause allows that. Consultation would normally unfold within the process, but we must ensure that the legislation allows for rapid intervention if unusual circumstances require that.

Phil Willis: That is a wholly unsatisfactory answer. The Minister is desperately trying to cover his back. The idea that action must be taken with great speed to overturn a bizarre curriculum decision, and that a school could implement that arrangement in 24 hours for all the kids and parents involved, is bizarre in itself. On reflection, the Minister may accept that.
 I cannot envisage a situation that would require such speed that the governing body could not be consulted. After giving the governing body powers to determine many aspects ranging from the curriculum to pay and conditions, does the Minister say that if we reach an extreme situation in which the powers must be revoked for good reason—I am not questioning that—automatic consultation with the governing body, as the body with the school's legal powers, should not be provided for in the Bill? I find that surprising. 
 I trust that when the Minister returns to his little house, he will reconsider the matter and put it in the Bill. [Interruption.] It is a big house. I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Clause 8 ordered to stand part of the Bill.

Clause 9 - Determination of pay and conditions

Graham Brady: I beg to move amendment No. 16, in page 6, line 19, leave out 'do anything', and insert
'take all reasonable action'.

Win Griffiths: With this it will be convenient to take the following amendments: No. 37, in page 6, line 19, leave out 'do anything necessary' and insert
'use its best endeavours'.
 No. 71, in page 6, line 19, after 'necessary', insert— 
', other than adjust the budget of a school,'.

Graham Brady: These significant amendments probe the heart of the Government's apparent treatment of local authorities. I am pleased to see that my hon. Friends have tabled amendments that take slightly different approaches. That is part of my strategy to attract the next defector from the Labour Benches. When that person has become fed up with overbearing Whips, he or she can come to us because we allow proper discussion in Committee.
 The clause features a remarkably open-ended requirement in subsection (1)(b) that local education authorities 
''shall do anything necessary to give effect to the governing body's determination under paragraph (a)''.
 Paragraph (a) details the determination of pay and conditions during and after exemption. That requirement might be appropriate if the local authority agrees with the proposed variation of pay and conditions, but to impose it is strange. 
 Amendment No. 16 would replace the phrase ''do anything'' with the less open-ended ''take all reasonable action''. Amendment No. 37 requires ''best endeavours'' to be used, and amendment No. 71 would insert 
'', other than adjust the budget of a school''.
 All the amendments have the same aim. The clause empowers schools to vary pay and conditions for teachers. The Minister said that earned autonomy schools will not receive additional funds, but the clause seems to undercut that assurance. Should a governing body vary pay and conditions, possibly quite dramatically, the local education authority has a statutory duty to do ''anything necessary'' to provide for that. That duty might vary the school's budget, which is addressed by my hon. Friend the Member for Isle of Wight in amendment No. 71. 
 The Minister suggested that bizarre changes to the curriculum might occur. Are bizarre changes to pay and conditions equally possible? They may be an attempt to void particular tax liabilities, or structure pay in a more attractive way. That is relevant when schools increasingly have to trawl for teaching staff overseas to fill vacancies. Pay and conditions requirements typical in other countries are not so here, and may place an unreasonable burden on the local education authority. The Minister must reassure the Committee and LEAs. Local education authorities' powers on school budgets may be seriously constrained and controlled by ministerial order. 
 The provision, which is very broad, places requirements on local education authorities that will have to be met using a small fraction of their current budgets. The larger portion of their budgets will be removed from their control and ring-fenced by Ministers. Local education authorities might have little discretion left with which to meet the requirements of subsection (1)(b). I am sure that the Minister will want to reassure the Committee on the matter. 
 If I am right to say that this is an open-ended clause, the Minister will want to make proposals to deal with it. Otherwise, he needs to reassure the Committee and those who follow its proceedings that the provision can be included elsewhere in the Bill and can be prevented from causing enormous damage to local authorities.

Chris Grayling: I support all three amendments, including those tabled by my hon. Friend the Member for Altrincham and Sale, West and by my hon. Friend the Member for Isle of Wight, who apologises because he has been called briefly out of the Room. He is committed on the matter and has tabled two amendments in order to encourage the Government to think again about this sweeping measure.

Graham Brady: I take the opportunity to put it on record that my hon. Friend the Member for Isle of Wight has been called away in connection with serious job losses in his constituency. Hon. Members of all parties will understand.

Chris Grayling: I thank my hon. Friend for making that point. My hon. Friend the Member for Isle of Wight raised the issue in the House this morning. Today's large job losses are extremely bad news for his constituency, and I am sure that the Committee would like to send its commiserations and condolences to his constituents.
 As a new Member participating in my first substantial Standing Committee, I feel great anxiety about the response to amendments. Many of the Conservative amendments are measured, well thought out and designed to enhance the Bill. They do nothing to drive the Bill in a different direction. Conservative amendments were tabled in an attempt to improve law that is not as good as it should be. 
 It is distressing to learn how unwilling Labour Members are to take on board any constructive suggestions from Opposition Members. Committees are supposed to be constructive and thoughtful, and they should be about improving the quality of legislation. It is disappointing that not one amendment has so far received a positive response from the Minister. 
 Amendment No. 37 highlights some particularly poor drafting in the Bill. Let us consider the exact wording of subsection (1)(b): 
''the local education authority shall do anything necessary to give effect to the governing body's determination under paragraph (a)''.
 What does ''anything necessary'' mean? Does it mean closing another school or cutting jobs at the LEA in order to release financial resources? Does it mean restructuring or merging schools? Does it mean closing buildings? Does it mean taking money from other budgets or reorganising the structure of the council? That cannot be good law by any definition. 
 For precisely what does the Minister intend the provisions to be used? Why is it necessary to be so sweeping and dictatorial? If the legislation is not about instruction, mandate and centralisation, I should like to know what is. If ever there were an example of a declaration of instruction from central Government, surely this is it. The local education authority is required to ''do anything necessary'' to facilitate the legislation. I am sure that the Minister did not draft the clause, but he has the unhappy job of defending it. If ever there were a moment for him to step back and listen to the constructive comments of Opposition Members about elements of the legislation, this is it. 
 As we consider the group of amendments, the Minister could say that he is happy for the provision to say ''take all reasonable action'', ''use its best endeavours'' or to include the caveat about adjustment to a school's budget. However, if this is to be a good, well-drafted piece of legislation, commensurate with the responsibilities of the House, surely he should accept at the very least that the clause's wording is not satisfactory, is not good law, does not add value to the Bill, will not improve the quality of our education system and will not lessen the work load of teachers, heads, LEAs or, indeed, Ministers. There is no reason whatever not to accept a minor redraft and say, ''Okay, we'll ask LEAs to do the best that they can, but we won't tell them to do absolutely anything.''

Phil Willis: I almost entirely agree with the hon. Members for Altrincham and Sale, West and for Epsom and Ewell. We described the previous clause as bizarre, and this clause, too, is bizarre. I am sure that the Minister will realise on reflection that it has not been fully thought through.
 I have several questions. Does the Minister envisage that the employment of teachers will continue to be with the local education authority or that, in the context of disapplication, schools will be able to take on the employment of individual teachers? The remarks about the cost to LEAs were right. For many years, Labour Members and I, particularly those of us who were involved with local government, found it unacceptable that each year the Government heaped new responsibilities on to local authorities, but did not give them the resources to meet them. I think that I strike a chord with Labour Members. 
 We are talking now about an open chequebook. Let us consider a large secondary school with 120 staff, all of whom have individual contracts under this arrangement. All those contracts have to be negotiated, and the Minister is saying that that is the LEA's responsibility. It had no say in the arrangements, but has to pick up the legal costs, pension costs, et al. The Minister must recognise that, because of current pension arrangements, which attract an automatic subsidy from the local authority, that would affect the budgets not only of schools but of local authorities in the area. 
 Has that cost been estimated? We understand that only 10 per cent. of schools will be involved initially, so that cuts the cost a little. Over time, however, far more schools will earn autonomy—perhaps a significant number. Has that cost been estimated? Does the Minister not find it somewhat bizarre—lto use that word again—that if an LEA must pick up what could be a considerable bill, the only way in which it can find the money is to take money out of school budgets? The Minister shakes his head, but where else will the LEA get the money? Will there be another glorified pot of money that goes to a particular group of schools? 
 The reality is that if an LEA must find that money, it will take it from the budget for schools. That means that other schools will pay for the cost of the innovation. Why does the school itself not have to pick up the costs, if it, and its governors, want to go down the road of disapplication, and make arrangements—bizarre or not—on pay and conditions? Why must the LEA—and, therefore, other schools within the authority—meet those costs?

Stephen Timms: Several misunderstandings have arisen, and I shall try to address them. The matter is straightforward. There is not a problem with the drafting.
 We have discussed the matter at length, and I regret that, as we also need to address in detail several further weighty matters. I wanted the Committee to sit again this evening: Labour Members made it clear that we would welcome that extra sitting, but the proposal was rejected by Opposition Members. 
 The phrase ''do anything necessary'' has prompted four amendments from Conservative Members, and three of them have been selected. As I mentioned to the hon. Member for Altrincham and Sale, West, Conservative Members have been free to explore a wide range of approaches to such matters. I welcome that, and I hope that it continues for many years. 
 We would not have debated the matter, if the clause had read: 
''The local education authority shall give effect to the governing body's decision.''
 A question therefore arises: why has the phrase ''do anything necessary to'' been inserted? It has been inserted because the LEA will not have to do anything in many cases—for example, if the exemption concerns the curriculum. We must allow for that by inserting those four words in paragraph (b). 
 The governing body of a school where earned autonomy applies will make decisions that take account of the school's resources. It will not be able to make decisions that involve spending money that is not in the school's budget. The schools budget will act as a constraint, and we have made that point. 
 Given that, there must be a related responsibility, with the LEA, to take account of the governor's power, and to ensure that the procedure's work smoothly. That will involve deciding whether the LEA should take action to ensure that the changes to teachers' contracts are implemented—for example, to ensure that they are paid in accordance with the provisions agreed by governors, in consultation with their teachers, and in accordance with the order issued by the Secretary of State, or the National Assembly of Wales. Changes to the payroll system will frequently have to be made.

Graham Brady: The Minister has explained what the local authorities will not have to do, but the only example that he has given of what they would have to do related to the payroll. That is an interesting example. Schools would usually have a delegated budget. They would have freedom with regard to contracting. Therefore, they could use either the payroll services of the local authority or those provided by an outside contractor. Given that, any requirement with regard to payroll would be covered by the contractual requirements between the school and the provider—regardless of whether that was the LEA or a commercial provider. Therefore, so far, no justification has been given for the measure. I want the Minister to give concrete examples of what an LEA would have to do, which would not ordinarily be covered by contract.

Stephen Timms: There are many schools for which the LEA provides a payroll service, not on the basis of a contract, but as an extension of a long-standing arrangement. When that position obtains, the LEA must change the details on the payroll.
Chris Grayling rose—

Stephen Timms: I will give way in a moment, if we need to spend even more time on this matter.
 Such changes may be necessary to give effect to the governing body's decision. As I have repeatedly made clear, that is within the constraints of the schools budget. It is not the case that LEAs will have to carry out an extreme or extraordinary task. We certainly do not want to enter into another lawyers charter about what constitutes ''reasonable action'' or the other forms of wording inserted. It is made clear that the LEA does not have the option to refuse to implement changes made or to refuse to pay teachers in accordance with what the governing body has decided, which may be a consequence of the amendment.

Chris Grayling: The Minister talks about lawyers charters, but the phrase ''do anything necessary'' is just as much of a lawyers charter as anything else. Will he address a practical example? Let us suppose that a teacher negotiates with his or her governing body an attractive performance-related package—he or she is paid less, but a bonus is paid on top for performance in exam results—and that package is not consistent or workable within the LEA's payroll software package. The package cannot cope with the pay model that the school has agreed. Is the LEA therefore required to spend a large amount of money on recommissioning its payroll software, so that it can deal with the new pay structure for that teacher?

Stephen Timms: I am not sure what age of computer system the hon. Gentleman is referring to. The LEA would indeed have to make whatever change was needed to its payroll system in order to make the slight change that he described. That would not be onerous for any payroll system in use in any LEA in the country.
 On amendment No. 71, necessary action by the LEA clearly needs to be within the law. The school's budget share will be subject to the same requirements, and there is therefore no question that an LEA would have to pass on extra funds to a school. Given our lengthy discussion, I hope that the amendment will be withdrawn.

Phil Willis: I asked the Minister why it was necessary to pass this responsibility to the LEA, and why should the school not take on those responsibilities, including payroll functions, under earned autonomy.
 Sitting suspended for a Division in the House. 
 On resuming—

Stephen Timms: I was responding to an intervention from the hon. Member for Harrogate and Knaresborough. The position is that if the LEA is the employer, the legal obligation to provide a payroll service rests with the authority, although it is worth noting that nothing in this part of the Bill changes the employer. The LEA can delegate the payroll responsibility to a school, but that does not change the legal responsibility.

Phil Willis: Payroll is not a big issue, and I agree with the Minister that any modern piece of software will be able to deal with it. The question is about the legal contracts. If a school varies those contracts, should it be responsible for drawing up the legal documents?

Stephen Timms: If a discussion between the school and teachers leads to changes in contracts, that will need to be determined locally. The school will have that responsibility, although that is not affected by this part of the Bill. As the hon. Gentleman said, the payroll issue is a minor issue, but it is an example of what may arise under the clause. The LEA has to put the steps in place to ensure that the governing body's wishes can be implemented. On the specific question of contracts, the answer is yes, schools will be responsible for drawing up the documentation.

Graham Brady: I was a little concerned that the Minister may be padding out his replies somewhat, and I was wondering whether that was in the hope that the Government may obtain a majority in the Committee again before we move to a vote on the amendment.

Stephen Timms: I reassure the hon. Gentleman that I am anxious to make progress as rapidly as possible. I would be glad to be in Committee this evening to make further progress. The raft of interventions has concluded, and I shall resume my seat.

Graham Brady: I am not persuaded by the Minister's argument. All those responsibilities will have to be met from the school budget. What about future commitments? What about performance-related pay and pension commitments? I will press the matter to a Division.
 Question put, That the amendment be made:—
The Committee divided: Ayes 7, Noes 8.

Question accordingly negatived. 
 Question proposed, That the clause stand part of the Bill.

Graham Brady: It is unfortunate that the Minister has not dealt with the concerns of Opposition Members about clause 9 and the obligations that it would place on local government. Although he narrowly saved the subsection, and the Government Whip narrowly secured his position, I hope that he will give further thought to this important question. I hope that he will also reflect on the number of hon. Members who raised sensible concerns about the matter, and consider whether it may be appropriate to table an amendment of his own.

Andrew Turner: I apologise that I was not in Committee for much of the debate on my amendment No. 71.
 I listened to the Minister's answer, which I was looking forward to hearing. I am not convinced that he understands how schools work, nor was I convinced from his responses to the hon. Member for Harrogate and Knaresborough that he understands delegation and what is and is not delegated. I will extend the example that was given by my hon. Friend the Member for Epsom and Ewell. The Minister suggested that the LEA has a duty to amend its payroll software system, if necessary. He thought that it would not be necessary, but accepted that, if it were, it would be the duty of the LEA. I presume that the cost would be met entirely from the LEA's held-back budget if there were no contract between the school and the LEA. That is an entirely unfair burden on the LEA and, more importantly, on the schools that have not taken advantage of earned autonomy. We all want equity between schools with and without earned autonomy. 
 The Minister could not answer the hon. Member for Harrogate and Knaresborough on the issue of the responsibility for drawing up the contract. He fiddled around with a piece of paper that landed on his desk from I know not where. He clearly did not have an answer on that piece of paper.

Phil Willis: I am grateful to the hon. Gentleman for giving way, as he makes an important point. I understood the Minister to say that the contract would be the responsibility of the school, which was an important statement because it means that any school that applies under earned autonomy would have to pick up the significant legal costs in its budget.

Andrew Turner: Indeed, the Minister said it would be the school's responsibility, but he did not point to any part of the legislative framework that confirmed that it would be. That is why my hon. Friend the Member for Epsom and Ewell was right when he said that the proposal was a lawyers' charter. It is not only a charter, but a blank cheque for lawyers; when a contract is drawn up between a local education authority and a teacher in a community school, it is usually drawn up by the local authority's legal department or by its personnel service. Most personnel services are devolved; the funding for most legal departments is not delegated to schools. It would therefore be entirely a matter for the local authority's internal arrangements under which budget heading to include responsibility for drawing up the new legal contract for the members of staff employed under the new framework for earned autonomy. In such circumstances, it is hard to see how there could be equity between schools in different local education authorities.
 Another issue is whether the delegated personnel service includes the construction of a contract; that may not be clear, because it may have been assumed in drawing up the scheme of delegation that only one more-or-less standard contract of employment, with variations, would be in existence. 
 I want the Minister to point to the legislative provision that overrides subsection (1)(b). As he has not done so, I am not convinced that such a provision exists.

Chris Grayling: I want to make two further points, pursuant to those made by my hon. Friend the Member for Isle of Wight. First, on the nature of the contract, I am well and truly confused about whether the new contract will be with the school or with the LEA. If it is with the school, it throws into sharp relief several issues, such as the provision of pension fund arrangements. What happens to a teacher who is in a local education authority pension fund if the contractual arrangement reverts to being with the school? What happens in respect of other terms and conditions of employment?
 If the contract is not with the school, there are implications under employment law if terms and conditions are varied. There are European legislative stipulations surrounding the variation of terms and conditions for employees. Can the Minister tell us which, if any, of the regulations would apply as a result of the changes? What consultation would each LEA have to go through? My understanding of European employment law is that if employers vary the terms and conditions of employees, they are obliged to go through a period of statutory consultation with them. I presume that the mere presence of the possibility for individuals to negotiate contracts, which has not previously been the case, would be covered by European employment law. I should be grateful if the Minister would clarify that point.

Stephen Timms: I am continually surprised at how much time Opposition Members want to spend on this matter, given the limited time available.
 I am entirely satisfied that the wording in the clause is robust. I listened carefully to the points made by the hon. Member for Isle of Wight because he has a good deal of experience in these matters. It is true that an LEA could delegate to schools the job of drawing up contracts. That is what I envisage would happen if there were to be such a variation. The LEA would not have to do that. It could maintain that responsibility and produce the contracts itself, but the most sensible arrangement would be for the LEA to delegate that task to the school. As we are starting to get questions relating to transfer of undertakings legislation, I must emphasise that nothing in the Bill changes the employment relationship. Teachers who are LEA employees before the exemptions are put into effect will continue to be LEA employees. I have made that point repeatedly.

Phil Willis: The Minister has now raised an important issue. As he knows, the provision it does not work under the Transfer of Undertakings (Protection of Employment) regulations. Is he now saying that a school that had earned autonomy and had disapplied its staff's pay and conditions would be allowed to issue a contract to an employee who wanted to stay on his existing terms and conditions? Alternatively, if a school forced that employee to go on to new terms and conditions, as happened after 1993 with the incorporation of further education colleges, who would have the legal responsibility for sorting out that mess? Would it be the school, the LEA, the Secretary of State or the company?

Stephen Timms: There is no transfer of undertakings. That is the point that I have been emphasising. The identity of the employer does not change. If the LEA was the employer before the exemptions were applied, it would still be the employer afterwards. We are not in the terrain that the hon. Member for Epsom and Ewell suggested we were getting into.

Phil Willis: We are in that terrain. The Bill goes on to talk about setting up companies that could provide those services. Private sector companies could also run the management of a school. If a private sector company such as Nord Anglia took over a particular school there would be new contracts, and TUPE arrangements would apply.

Stephen Timms: I look forward to those discussions when we reach that part of the Bill. The issue does not arise here.

Graham Brady: The Minister has confirmed that the LEA will remain the employer, yet the school will be able to vary the pay and conditions of members of staff and will have a responsibility to do so in budget. What would happen if a school varied pay and conditions to include a bonus or a performance-related arrangement that would apply at a future date? I assume that as long as the school had acted in good faith in entering into a contractual agreement with the employee, it would be doing its job properly if it worked within what it believed the budget would be, yet it would be the LEA, as the employer, that would find itself liable for the payment of those sums of money. How does the subsection exclude the possibility of the LEA finding itself with a future liability that is difficult to quantify and to which it has not given any approval?

Stephen Timms: There is no difference between the situation that the hon. Gentleman describes and the one that prevails now. Decisions need to be made within the budget that is available to the governing body. At the moment they need to be made within the budget that is available to the school through the LEA. The situation has not changed.

Chris Grayling: Will the Minister address one more possible scenario? It is important to get this right. The Minister does not seem to appreciate the significant implications of the clause. Let us consider the example of a school that agrees to enhance a teacher's pension fund as part of pay and conditions. This year, pensions of Members of the House were changed from a one fiftieth to a one fortieth arrangement. If such a change were replicated in a school, would the local authority be required to implement it? If it were required to implement it, would it legally be able to avoid making the same offer to all teachers in the LEA area? If it were not required to do that, there would be a limitation on the powers of the school to operate freely in setting terms and conditions.

Stephen Timms: Any financial implication arising from an exemption being exercised would have to be picked up from within the school's budget, and the administrative implications would have to be taken up with the LEA.

Chris Grayling: Pension fund payments do not come from the school's budget. The pension is part of a teacher's pay and conditions, but the payments are made at a future date from a central pot held by the local authority. The obligation to the teacher will have to be met from the local authority pension fund but, according to the Minister, the negotiation about terms and conditions will be between the school and the teacher. That loop does not join up.

Stephen Timms: The employer's contribution to the pension fund would have to be made by the LEA; that is correct.

Graham Brady: We are now getting somewhere. The Minister confirms that the employer's contribution would have to be met by the LEA, but he also said that the amount of any contribution to a pension fund would be covered by pay and conditions, from which exemptions can be granted under the legislation.

Stephen Timms: I am sorry, but I missed the hon. Gentleman's question.

Graham Brady: Local education authorities are responsible for the cost of employer's contributions to the pension fund, but pension arrangements fall under pay and conditions, which are exempted so that schools can make their own arrangements. Is there not a possibility that a school might make arrangements for the amount or terms of payment of a pension that would then become a liability that the LEA would have to meet?

Stephen Timms: I think the answer is yes. The hon. Gentleman is making a fair point. As the LEA would pay the employer's contributions, there is a potential liability for the LEA, although such liabilities are generally modest.

Graham Brady: The generally modest liability—to use the Minister's words—could be increased by a decision made by the school and not the LEA. If the answer is yes, we are right in asserting that an open-ended commitment is being placed on the LEA.

Stephen Timms: It certainly is not an open-ended commitment. On reflection, I may be able to provide further helpful information to the Committee on the subject. If that is the case, I will do so shortly.

Chris Grayling: While the Minister is beginning to think about things again, let us develop his thinking one step further. The issue is that a school will be able to negotiate new pension arrangements with a teacher and, under the clause, the LEA will have to do anything necessary to give effect to such a determination. I question whether in law it is possible for an LEA pension fund to offer different terms to one member and not to the rest. In theory, a decision taken by one school could require an LEA to vary its pension terms for all its teachers. That is unreasonable. A decision taken in negotiation should not vary the pension arrangements for every member of staff in the LEA. That would be unacceptable, which is why we need a caveat that would allow the local authority to do its best to follow the school's instructions. If it is mandated to do whatever the school wants, the clause will not work.

Stephen Timms: The teachers' pension scheme is a national one. The hon. Gentleman's suggestion that a change for one person would mean a change to everyone's position throughout the LEA is incorrect.

Andrew Turner: May I posit a different scenario?

Stephen Timms: I would welcome a different scenario.

Andrew Turner: In a local authority that has several secondary schools, two are single-sex: more men teach at the boys' school, and more women at the girls' school. The boys' school achieves earned autonomy and introduces a new pay structure along the lines described by my hon. Friend the Member for Epsom and Ewell, with the result that men teachers earn more than women teachers employed by the same local education authority. I do not mean foundation or voluntary-aided schools, but community schools. In those circumstances, women teachers would not receive equivalent pay for equivalent work from the same employer. The employer will be required to do ''anything necessary'' to give effect to the governing body's decision, which may create difficulties under equal opportunities legislation.

Stephen Timms: The hon. Gentleman raises an interesting point. That difficulty would not arise because the school would take the decision via its powers under the provisions. I do not think that the LEA would face the problems that he envisages.

Graham Brady: The Minister was bemused by the concentration of so much effort on the clause, but subsequent debate has proved it necessary. He has allowed the power to negotiate terms and conditions to become divorced from the connected liabilities. The governing body of an exempted school will have power to vary pay, pension provisions or performance-related pay.
 The local education authority will be responsible for the employer's contribution to a pension fund. If a governing body varied pension fund terms, local education authorities would have a statutory duty to meet any extra costs. The Minister has accepted that. Although we approve of earned autonomy, and would like to see it work, clause 9 should not stand part of the Bill. Without amendment, which may come from the Government later— 
Mr. Timms indicated dissent.

Graham Brady: The Minister is shaking his head, but I hope that he will read our exchanges and reflect on what he is about to do.
 I urge my colleagues, and Government Members, not to place the open-ended liability on local education authorities and to vote against clause 9 standing part of the Bill. 
 Question put, That the clause stand part of the Bill:—
The Committee divided: Ayes 9, Noes 7.

Question accordingly agreed to. 
 Clause 9 ordered to stand part of the Bill.

Clause 10 - Powers of governing bodies to form or

Stephen O'Brien: I beg to move amendment No. 21, in page 7, line 9, at beginning insert—
'Subject to due remuneration for services provided having first been satisfactorily negotiated and agreed, the'.

Win Griffiths: With this it will be convenient to take amendment No. 60, in page 7, line 11, at end insert
'and shall ensure that the headteacher of each such maintained school, or other members of the teaching staff as nominated by the headteacher from time to time, is a director of the company'.

Stephen O'Brien: I add my welcome to you to the Chair, Mr. Griffiths, and congratulate you on allowing us to be in an unlocked Room.
 I hope that the Minister will not believe that we are spending too much time exploring chapter 3. He and I go back a long way, to sharing the same college at Cambridge but, although that firm friendship exists, it will not stand in the way of my duty to scrutinise and raise serious questions. Clauses 10, 11 and 12 sit together, and by virtue of the House's procedure, we are looking at amendments on a line-by-line basis. Some comments on each amendment may cut across other clauses, but I hope that that will avoid later repetition. 
 Chapter 3 provides governing bodies with the power to form companies and for the Secretary of State's powers on companies. The theme that runs through the clauses is one of a distinct lack of clarity. Do the Government want the companies to have genuine freedom as is provided by the Companies Act 1995, which relates to what we were discussing under chapter 2 on earned autonomy? Like the freedom of a company to direct its own affairs, will a school with earned autonomy have charge of its own affairs, or do the Government want to go down a more prescriptive route? Clause 11 suggests that, because there is only a discretionary power, regulations would specify that the company should be registered under the 1985 Act as a company limited by guarantee. We will deal with that on a later amendment. 
 Several hon. Members will have found themselves, perhaps for charitable purposes, directors or members of a company limited by guarantee and will understand the nature of such a company. In effect, it cannot afford to take any risk that could incur a liability, because the guarantee is normally minimal. That is the purpose of framing it as a company limited by guarantee unless—this is one of the matters that we want to probe—the Government intend to stand behind the companies as the guarantor. That would mean that, to operate as free companies, the schools could incur serious risks or debt, not least a cyclical cash flow problem, in order not to prejudice the interests of the children in those schools that have earned autonomy. No child can afford to have his educational progress interrupted by structural mistake or difficulty. 
 It was important for me to put matters in context, while recognising that I must be specific when speaking to amendments. Under chapter 3, local governing bodies can form companies to provide services or to own assets. It is difficult to determine whether such companies will have a genuine freedom that a normal company would enjoy under its board of directors, whereby they are accountable to their shareholders or whether the provision is intended to be a mechanism—a smokescreen, even—to allow the operation of a prescriptive and centralising regime. That is a fair question. 
 The Minister has been slightly méchant in wanting us to believe that the amendments do not point in the same direction. I am the first to admit that they do not. They go in several directions to probe the Government's mind. When we have explored matters, no doubt we shall find that they are not pointing in one direction, but are trying to have it all ways without accepting responsibility for so doing. 
 Amendment No. 21 refers to subsection (5) which covers a governing body of a maintained school that wants to exercise the power conferred on it under subsections (1) to (4) under which it forms a company to provide services or facilities 
''to exercise the relevant local education authority functions''
 or to make arrangements to provide such services or functions. Under the amendment, in advance of setting up that company, it would be critical—in understanding what is in the Government's mind in terms of the expectation and responsibility on the companies—for staff first to have their remuneration settled. Given our discussions on the amendments under part 2, without such a provision certain action could become an excuse. 
 Let us not pretend that all governing bodies will be completely on the side of the angels. One or two will no doubt look for a smart opportunity, which may not accord 100 per cent. with what we would like to believe are the Government's good intentions. It is possible that such services could be abused by those seeking to remove themselves from the restrictions, especially if the Government have not issued regulations whereby the Secretary of State has retained powers to prescribe. 
 I go back to the overall theme of whether the companies will be stand-alone companies that will be accountable and have genuine responsibilities. Later amendments will flush out what the companies are expected to do, either on their own or because they will be, in effect, a mouthpiece for the Secretary of State. The amendment would ensure that the remuneration of the staff of the company had first been negotiated satisfactorily and agreed. Those who would be subject to terms and conditions that had to be settled for staff of such a company might find themselves in a worse or, possibly, better position than under existing arrangements. That leads to genuine concern about the Government's intention. 
 I am glad to know, from what I have read in briefings, that the Minister is familiar with working in limited liability companies. He may have been a director, so he will be well aware of the responsibilities, fiduciary duties and ostensible authority that all directors must have in relation to their companies, and the ability to bind those companies in relation to all those services and functions. The critical requirement in relation to testing is whether the intention is to have a free and stand-alone company or whether the Secretary of State would have prescriptive control, which might mean very short take-up of the opportunity, because there would not be the normal corporate incentive to settle terms and conditions for staff. 
 On amendment No. 60, the wording ''may provide staff'' gives no indication whatever of whether it is intended that head teachers, or a teacher or member of the teaching staff nominated by the head teacher or governing body, from time to time, should be a director of the company. One need only look at the current equivalent, the learning and skills councils, on which, extraordinarily, teachers are primarily absent, although they would have some of the most important input. We therefore already have experience of a body that the Government regard as innovative, which does not involve teachers. The amendment is intended to flush out whether the Government intend teachers—who are the key to success in our children's learning environment—to have ownership of the process or whether teachers will simply regard it as the busy architecture around them, which is yet more fuss when they are trying to concentrate on raising standards and making sure that children have the best education. The Minister claims that the Government regard raising standards as the purpose behind the Bill. I am concerned, to say the least, that there is no presumption—or automatic right—that a head teacher or teacher nominated by a head teacher is expected to be a director of a company formed under the clause. 
 I am sure that parliamentary draftsmen would want to spend a great deal of time on accurate wording and, like all my colleagues, I am deeply grateful for the work that they do. However, the amendments are intended to raise genuine points of concern about the principles that lie behind the concept of companies, and to probe whether the Government are intent on genuinely hiving off responsibility, and whether head teachers and teaching staff will be allowed to be part of the ownership of the process so that they can help form judgments and ensure delivery of standards.

Phil Willis: The hon. Gentleman has engaged in an interesting exposé of the clause. In formulating the amendments, has he considered that, under the Companies Act, a company can be taken over by another company? A company may be set up by a school, which does not have the head or any directors on behalf of the school on its board, and which is subsequently taken over by another company. At the moment, education companies are seen as profitable—their stock market prices have not been affected by the perceived recession elsewhere. Will the hon. Gentleman comment on that? The matter does not seem to be dealt with in the Bill.

Stephen O'Brien: I am most grateful to the hon. Gentleman for making that point. He is right. Nothing in the Bill deals with that, other than a presumption that the Secretary of State may exercise powers in order to intervene, in an unspecified and unpredictable way, when dealing with companies that are properly capable—whether private limited companies not on the stock market or any other free market that can do a deal in the event of a transaction on the shares, or a public limited company that, in the event of either a consensual or a hostile bid, might be on the receiving end of interest from another.
 If the hon. Gentleman would be patient enough to wait until we discuss amendments Nos. 61 and 62, which relate to proposed new paragraph (vii), he will find that I have tabled an amendment to flush out that aspect. In order not to try your patience, Mr. Griffiths, I should not leapfrog to that amendment before we deal with these amendments, which are linked. I am grateful to the hon. Gentleman for making that point, which previews what I hope will be a testing and rewarding challenge for the Government to come clean about the provisions.

Chris Grayling: I should like to say a few words in support of the amendments tabled by my hon. Friend the Member for Eddisbury (Mr. O'Brien) and to make a few comments on this section of the Bill in general.

Win Griffiths: Order. The hon. Gentleman should keep that bit short.

Chris Grayling: I shall indeed.
 The two amendments relate to two important points about the principles of bringing companies into contact with schools. The first relates to the issue of work load in schools. It will clearly be unsatisfactory for a governing body to impose on a school, within the confines of the existing structure of staffing and resources, a new venture that takes resources away from the education of pupils. It must be a supplement to the school, not an attempt to replace part of the school's activities which will create complications in the school. 
 Amendment No. 21 specifies a requirement for suitable remuneration for those who put their time into creating a company, and by definition to release resources so that they add value to the school rather than take resources away. It is enormously important. One of my anxieties about how the provisions could be implemented is that they may ultimately add to teachers' work load in the school, rather than taking away from it, and to governors' work load. We all know the pressures under which governing bodies operate and the limited amount of time that volunteer governors have to contribute. It is therefore tremendously important that a company set up by a school is set up on the basis of being a distinctive venture with significant potential that can resource the time and effort put into it and achieve success without detracting from performance in the educational arena of the school. It is therefore especially important that the sort of provision allowed for in amendment No. 21 is made. It sets out a clear dividing line between establishing a company off the back of the existing school and establishing a company that can reinforce the existing school. 
 The second point relates to amendment No. 60. We must ensure that the creation of a company or business venture in the school or by the governing body does not conflict with the educational efforts of the school at an operational level. An environment in which the school was running a commercial operation in which the head teacher had no direct involvement would be unacceptable. At the very least, the head must be a non-executive director on the board who can say, for example, ''Hey, guys, if you do that we won't be able to offer games on Thursday afternoons or I will have a problem with staff resourcing.'' It would be most undesirable if a commercial decision taken by the governing body had an adverse impact on the educational operations of the school. The caveat is necessary because the head is running the school primarily and fundamentally for the benefit of the pupils.

Phil Willis: I follow what the hon. Gentleman says, and I agree with him that any activity that takes away from the core activity of educating young people is unacceptable. Does the hon. Gentleman think there will be a conflict if, to follow the scenario, a company is set up and taken over by a plc, which has a duty to its shareholders and not to the students of the school? That is a distinct possibility as major companies in the marketplace are trading on the stock market.

Chris Grayling: No, there would not necessarily be a conflict; it would depend entirely on the nature of the company involved. For example, let us suppose that a school with substantial grounds, and ground staff, developed expertise in that respect and skills that were in short supply at other schools in the area—I imagine that the Minister considers that such a scenario might result from the measure. The school might then decide to turn its grounds operations into a limited company and sell them to other schools; the shares in that company would be held by the school's governing body.
 I cannot conceive of circumstances in which a plc would be able to walk into a school and take the company over without making a significant injection of cash in the school. The school would go through the same financial process to secure private finance initiative money. The school could raise PFI money to make a capital investment and would face a long-term contract with a commercial company as a result. Allowing the commercial company to take over the grounds operation and to provide a contracted service to the school over a period in return for a cash payment, which could then be invested in the school, may be a different legal mechanism, but it is not very different from what is happening under PFI. 
 My hon. Friend's probing amendments are extremely important. I would welcome the Minister's clarifying in exactly what form he expects the clause to be implemented. He gave a half nod to my ground staff analysis. Will the clauses provide for a total educational service? Could Manchester grammar school start selling educational services back to the LEA in Manchester or is it the intention that only limited supplementary services be provided on behalf of the school? It would help the Committee to reach a resolution on the clauses and the amendments if we understood exactly what form the Minister expects the companies to take. It would help if the hon. Gentleman could give us examples.

Stephen Timms: I am pleased that we have reached chapter 3 and can give some time to these important matters. I regret that we cannot continue discussing them into the evening, as Labour Members would like to have done. However, I do not begrudge the Committee the time spent on this part of the Bill.
 The clause introduces enabling powers to allow governing bodies, including those of nursery schools, to form or join companies to undertake certain activities. Those three activities are set out in subsection (1): first, to provide traded services and facilities to any schools; secondly, to carry out functions on behalf of an LEA; and, thirdly, to purchase services and facilities on behalf of their member schools. 
 The third activity is intended to help schools benefit from economies of scale, and it enables governing bodies, in conjunction with others, to form joint venture companies. Our intention is to encourage co-operation between schools; that will help them to perform their core education role more effectively. 
 There are a growing number of examples of schools working together in a spirit of constructive collaboration. That is a welcome trend, and the provision provides a vehicle to make it easier for that to continue. Schools will save time and money if they work together to procure goods and services, and that will enable them to focus on their core education role. 
 Pilot schemes are operating in the London borough of Havering and in Surrey, where the LEA has been exploring the possibility of delegating some of its responsibilities to schools, under subsection (1)(b). That scheme might be of particular interest to the hon. Member for Epsom and Ewell.

Ashok Kumar: The measure might encourage various innovatory schemes. An advanced scientific laboratory could be built by several schools, working together, and a company might be established so that three or four schools could participate. Is that an example of what might happen?

Stephen Timms: That is a good example. We wish schools to collaborate in that way, and the measure provides a vehicle to facilitate their doing that.

Stephen O'Brien: That was a helpful example. The construction of such a laboratory might involve a degree of corporate risk, and it is important to be clear about where responsibility for that risk lies—particularly as the provisions appear to be discretionary, and a company might be limited by guarantee. That leads back to the points that I made earlier.
 I shall offer another example, to ensure that we focus on what happens on the ground, rather than on theoretical matters. I wish to know whether what the Minister has said would also apply to the following situation. Six local schools—primary or secondary—might get together to provide common transport provision on a number of routes. Those schools would, therefore, become the hub of a transport network, and they might wish to add the spokes, as it were, so that they could exploit economies of scale. The company that would be formed by the governing bodies of those schools would be responsible for contracting the drivers and for any supervisory staff that might be needed. Would it also be able to own the buses that serviced its routes? In other words, could it be an asset-based company, as well as a company that relied on revenue?

Stephen Timms: Several schools could come together to provide transport services, thereby benefiting from economies of scale. That is the kind of development that might be encouraged.
 To respond to an earlier point that was made by the hon. Member for Eddisbury, subject to basic safeguards we want companies to be as free as possible to manage themselves. In our view, companies should have the flexibility to decide the most suitable management arrangements that are free from bureaucracy. The amendments would undermine that objective. 
 Any member of staff of a school who became involved with a company's activities would have to agree to do that. There is a variety of ways in which the member of staff could work for the company. For example, they could be on a temporary secondment, or part of the working week could be spent on company rather than school business. Different remuneration arrangements would be needed in different circumstances. Amendment No. 21 would introduce unnecessary formality to the procedure. In reality, arrangements would be best left to local discussion and agreement.

David Laws: Will the Minister clarify whether any schools will not be able to form companies in the way envisaged in the Bill? Would failing schools be allowed to set up companies? How would he compare the number of schools that will be entitled to set up companies with the percentage of schools that will be allowed autonomy, which he quoted this morning?

Stephen Timms: I refer the hon. Gentleman to clause 11(1). I am grateful to him for giving me the opportunity to underline this point, because it follows on from our previous discussion.
 A governing body would require the consent of the local education authority in order to join a company. If consent were withheld, the school would not be able to join the company. Paragraph (b) is relevant to the hon. Gentleman's point because if the school did not have a delegated budget, it would not be able to join a company. 
 We will not set thresholds, and the measure is different from that which we have discussed previously. We can only wait and see the number of schools that will take up the opportunity. Schools have a substantial and growing interest in working together, and the provision will make that easier and more effective.

Chris Grayling: While the Minister is clarifying these points, will he tell us the degree to which the provision for the companies involves the delivery of educational services? Is it conceivable that a governing body would have the right to sack its head teacher and staff, and bring in a company established by a more successful school to run the school? In theory, could a governing body subcontract out the entire management and educational management of its school to a more successful school?

Stephen Timms: That does not sound like a likely scenario. The governing body has clear responsibilities in this area, which it will exercise normally. The scenario is possible—subsection (1)(a) makes this clear—because we are considering services provided to schools by other schools. We want more examples of that. The hon. Member for Epsom and Ewell, or one of his colleagues, suggested that strong schools could support weak schools. There will be many examples of that. The new provision will make that easier.
 Amendment No. 60 specifies the people from each school who should be on the board of directors. We would not want the Bill to specify that the representative should necessarily be the head teacher or a teacher, which the amendment would do. That would preclude administrative staff or bursars from sitting on the board. Such people may have the experience and time that are best suited to the day-to-day role of running the company. Given the concerns expressed by members of the Committee about the work load of teachers and heads, it would be inappropriate to insist that only members of the teaching staff could undertake these duties.

Stephen O'Brien: I fully accept that none of us, particularly those who have paid numerous visits to their constituents and local schools, wants to add to the burden of teachers. The Minister makes a fair point. However, he knows that it would be otiose to use the phrase ''non-executive'' or ''advisory'' in an amendment. A director can be part of the day-to-day management and be entitled to attend board meetings, whatever their frequency.
 If an organisation that is responsible for those functions and services is to serve the interests of raising educational standards for children, board members must have teaching skills, or there will not be the required expertise. A bursar must have financial ability, which is critical to any board. After all, the Government criticised Railtrack for having no engineer as a board member. 
 The Under-Secretary of State for Wales has picked up on my long intervention. However, he was educated in Wales and he will understand that I am given to a touch of prolixity.

Stephen Timms: It would depend on the nature of the company. If the company carried out procurement on behalf of a group of schools, it is likely that someone other than a teacher would be an appropriate board member. It is worth pointing out that a large number of schools might be members of one company—for example, an LEA. One would not want to insist that every school had its own representative on the board, as long as there was a process by which all the schools could agree on the directors. Amendment No. 60 would impede effective operation of the company.
 I hope that members of the Committee agree that governing bodies will be able to make sensible decisions about such matters, and they do not need the extra bureaucracy that would be created by the amendments to operate effectively. I hope that the amendments will be withdrawn.

Stephen O'Brien: The Minister has not reassured me on that matter. In his response to the hon. Member for Harrogate and Knaresborough, he prayed in aid clause 11, thereby admitting that chapter 3 hangs together. It is difficult to understand the Government's mind, especially in the absence of reassurances from the Minister.
 It is also becoming increasingly difficult simply to take the Government on trust when they maintain that the clauses are enabling powers. They are subject to the exercise of powers by the Secretary of State later, and subject to our further discussions on some of the clauses and amendments to be considered later in the debate on chapter 3. It is becoming increasingly unclear, if they are enabling, to what extent the regulations will play a major part in governing the companies, or whether those companies will be free. 
 The Minister's answers were not sufficient, and it would be helpful to have some pro forma regulations. In the absence of such regulations, there is a great deal of flexibility and freedom. I suggest to all Members who see the provision as a tool to help to raise standards that these are companies, and financial interests are at stake, so there may be some who are not entirely motivated to raise standards. The reassurances have not gone far enough to give confidence that those with financial interests, those who look for cheap takeovers or those who would decrease joint bus services, for example, will always act in the interests of children, staff and teachers. Under clause 60, we need to include on the board those whose primary concern is children's educational needs.

Chris Grayling: My hon. Friend raises an interesting point. It is often difficult to find people who are willing to serve as school governors. If we introduce a commercial dimension to the governing body, and if the head is not given the statutory right to participate—at least as a non-executive—a governing body could be hijacked by those who saw it as a commercial opportunity and were enthusiastic about taking advantage of that.

Stephen O'Brien: My hon. Friend reinforces the point that, because of the lack of specificity and pro forma regulations in the clause, there is high corporate risk. There is also the potential for abuse by those who do not share hon. Members' motivation to improve education. Members of all parties who have experienced corporate life will know that, just as in any other walk of life, 98 per cent. of people are well motivated, but there are always rotten apples.
 If it were not for the amendments, there would have been no acknowledgement of the risk that the governing body might be controlled in that way. In the absence of regulations, the debate cannot be conclusive. It would be inappropriate to press the two amendments to Divisions.

Graham Brady: Will the Minister publish the regulations?

Stephen O'Brien: I am grateful to my hon. Friend for that impromptu prompting. Will the Minister assure me that he will publish pro forma regulations? The Committee would be better informed if the regulations were published by Tuesday.
 I have been a Member for just two years—only in opposition, unfortunately. I should have thought that Labour Members would know better than me that it would be staggering if, when drafting regulations are included in a Bill, there was no document containing draft pro forma regulations swanning around the Department. It would cause the Minister no harm to cross out the word ''draft'' and publish those regulations. 
 If the regulations were published, we could be more certain whether our probing amendments are on to something, or whether the Minister's assurances are sufficient to give confidence to members of the public who are concerned that the Bill is going down paths that are not wholly desirable. I give the Minister the opportunity to say whether, in the spirit of future consensus, he will give that assurance.

Stephen Timms: I cannot promise the regulations by Tuesday, but I assure the Committee that we shall publish a statement of the policy underlying the regulations before the Bill leaves the House of Commons. That is in line with other commitments that I have made on points raised by the Committee.

Stephen O'Brien: I am grateful to the Minister. I accept that it would be difficult to produce the regulations by Tuesday at this increasingly seasonal time of year. That assurance will help us to clarify many of the uncertainties that have arisen. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Further consideration adjourned.—[Mr. Heppell.] 
 Adjourned accordingly at nine minutes past Five o'clock till Tuesday 18 December at half-past Ten o'clock.